after-market-making-presentation

--- layout: empty permalink: /after-market-making/ --- after-market-making-presentation

.Small[
.center[ 
*PhD defense <br> Florence - 23 October 2023*]

.small[
.center[
<svg aria-hidden="true" role="img" viewBox="0 0 512 512" style="height:1em;width:1em;vertical-align:-0.125em;margin-left:auto;margin-right:auto;font-size:inherit;fill:currentColor;overflow:visible;position:relative;"><path d="M352 256c0 22.2-1.2 43.6-3.3 64H163.3c-2.2-20.4-3.3-41.8-3.3-64s1.2-43.6 3.3-64H348.7c2.2 20.4 3.3 41.8 3.3 64zm28.8-64H503.9c5.3 20.5 8.1 41.9 8.1 64s-2.8 43.5-8.1 64H380.8c2.1-20.6 3.2-42 3.2-64s-1.1-43.4-3.2-64zm112.6-32H376.7c-10-63.9-29.8-117.4-55.3-151.6c78.3 20.7 142 77.5 171.9 151.6zm-149.1 0H167.7c6.1-36.4 15.5-68.6 27-94.7c10.5-23.6 22.2-40.7 33.5-51.5C239.4 3.2 248.7 0 256 0s16.6 3.2 27.8 13.8c11.3 10.8 23 27.9 33.5 51.5c11.6 26 20.9 58.2 27 94.7zm-209 0H18.6C48.6 85.9 112.2 29.1 190.6 8.4C165.1 42.6 145.3 96.1 135.3 160zM8.1 192H131.2c-2.1 20.6-3.2 42-3.2 64s1.1 43.4 3.2 64H8.1C2.8 299.5 0 278.1 0 256s2.8-43.5 8.1-64zM194.7 446.6c-11.6-26-20.9-58.2-27-94.6H344.3c-6.1 36.4-15.5 68.6-27 94.6c-10.5 23.6-22.2 40.7-33.5 51.5C272.6 508.8 263.3 512 256 512s-16.6-3.2-27.8-13.8c-11.3-10.8-23-27.9-33.5-51.5zM135.3 352c10 63.9 29.8 117.4 55.3 151.6C112.2 482.9 48.6 426.1 18.6 352H135.3zm358.1 0c-30 74.1-93.6 130.9-171.9 151.6c25.5-34.2 45.2-87.7 55.3-151.6H493.4z"/></svg>
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name: contents-slide

<br>

.Small[

>‘One thing will **definitely not occur** […]: **a repetition of subsidizing industrial policies** which have already failed in the individual countries’ (Martin Bangemann, 1992: 19)

<br>

>‘In the end, the **supporters** of an [EU] **industrial policy** were effectively **beaten back**’ (Leon Brittan, 2000)

<br>

>‘If Europe still wants to be a manufacturing powerhouse in 2030, **we need a genuine European industrial policy**. […] it’s what will give Europe its **economic sovereignty** and **independence.**’ (BMWE & MEDF 2019)

<br>

>‘After the “Europe of democracy” and the “Europe of the market”, let us now pave the way for a “**Europe of power**”’ (Thierry Breton, 2022)

<br>

>‘You cannot fall in love with the single market’ (Jaques Delors, 1989: 5)

]

---
name: part1
class: inverse, center, middle

## I <br> The Limits of Market Making

---

## The single market: Jenga edition

Building blocks of the single market:

- Open and reciprocal access to world markets

- An open and competitive intra-European market, undistorted by excessive aid for domestic firms

- State aid limited to developmental purposes and crisis-based measures
  
- Market-based allocation of resources and competition as ‘industrial policy *par excellence*’

If market-making was the *basso continuo* of the European project, **What explains the emergence of statist policies in a polity that is made up of anti-statist institutions?**

]]

]]

---

## Four contributions

- The role of the state in the design and direction of capitalist markets in the 21st century

- The centrality of global dynamics for the European project

- Institutional change in Europe

- The politics of EU industrial policy

]

.pull-right[
<img src="data:image/png;base64,#growth-decay.png" width="80%" style="display: block; margin: auto;" />
]

---
name: part2
class: inverse, center, middle

# What are the limits of market-making?

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## Geopolitics

Three trends:

<span>1.</span> Increase in subsidies and trade restrictions since 2008<br/>

.scriptsize2[
> ‘While our global industrial competitors get billions in subsidies, our bureaucracy is led by   political leaders – Mr Almunia is a political leader – who have not understood that the world has changed. It is like Rome surrounded by the barbarians. We all await the fall of Rome. It’s not funny’. (Arnaud Montebourg, 2014)

]

<span>2.</span> Supply-chain disruptions since the Covid-19 pandemic]

**It has led to the fusion of economic interest and national security**]]

.pull-right[
<img src="data:image/png;base64,#economist.png" width="65%" style="display: block; margin: auto;" />
]

---
## Twin Transitions

1. The lack of progress in digitalization, innovation, and cutting edge technologies

2. Structural inability of capitalist markets to produce a deep reordering of production.small[*]

**It has led to an expansion of what can be seen as market failure**

<br>
<br>
.small[*Or at least, without carbon shock therapy.]]

.pull-right[
<img src="data:image/png;base64,#tech.png" width="85%" style="display: block; margin: auto;" />

<img src="data:image/png;base64,#F64CeqQXsAAZY-t.jpg" width="90%" style="display: block; margin: auto;" />
]

---
## Renewed appraisal for industrial policy

.pull-left[
.Small[
‘Those government policies that explicitly target the transformation of the structure of economic activity in pursuit of some public goal’ 
(Juhász, Lane & Rodrik, 2023: 4)

e.g., stimulating innovation, productivity, and economic growth, climate transition, regional policies, good jobs, export competitiveness, import substitution]
]

.pull-right[
<img src="data:image/png;base64,#micro-potato.jpg" width="100%" style="display: block; margin: auto;" />

.Small[
Dosi et al (2021): micro chips are not potato chips!]]

---
name: part3
class: inverse, center, middle

# II <br> The eternal return of the global

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## Rival views of European integration

.pull-left[
<br>
<br>
<img src="data:image/png;base64,#emb-neo.svg" width="85%" style="display: block; margin: auto;" />
]

- The EU is not a single project, but an evolving compromise among different projects. Since the 1980s, a neoliberal faction has come to dominate EU integration, with concessions to neo-mercantilist (CAP) and socially-oriented actors (cohesion funds)

- Episodes of uncertainty and geopolitical change hold the potential to recast the balance between factions by making certain courses of actions more salient and more likely
]]

---

## Uncertainty changes economic calculus

.pull-left[
<img src="data:image/png;base64,#ENI.svg" width="80%" style="display: block; margin: auto;" />
]
.pull-right[
<img src="data:image/png;base64,#IP-GPT.svg" width="90%" style="display: block; margin: auto;" />
]

---

## Since 2016: shifting tides

.pull-left[
<img src="data:image/png;base64,#post-emb.svg" width="85%" style="display: block; margin: auto;" />
]

.pull-right[
<img src="data:image/png;base64,#jcms13428-fig-0001-m.jpg" width="90%" style="display: block; margin: auto;" />
]

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## III <br> The twin transitions

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## High-tech Europe: repurposing constraints as enablers

Three problems:

- State aid constraints (article 107(1) TFEU)

> Any aid granted by a Member State through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods
shall, in so far as it affects trade between Member States, be incompatible with the common market

- Limited state capacity (fiscal, administrative)

- Dispersion of competences between regions, member states, and EU-level]

]]

---
<img src="data:image/png;base64,#three-modes.svg" width="80%" style="display: block; margin: auto;" />

---

## Net-zero Europe: beyond relative prices

How to organize reallocation away from fully viable and highly profitable sectors?

.Small[
.pull-left[
**Climate change & political economy literature**

Focus on ‘winning’ coalitions and ‘entrepreneurial’ states. Underlying idea: when relative prices shift to renewables, the economy will follow the money.

Fundamental problem: under-estimation of the social and political resilience of carbon-based economies.

My contention: if a state is supposedly entrepreneurial, it must also be liquidating.

]

.pull-right[
<img src="data:image/png;base64,#fossils.png" width="90%" style="display: block; margin: auto;" />
]]

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## Wrapping up

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## Conclusion: after market-making

.pull-left[
.footnotesize[
A remarkable turnaround in the direction of EU economic governance has unfolded:

- This is based on a changing world and a fear of falling behind

Industrial policy is becoming *supranational* and *market-directing*;

Measures take a conspicuous shape by relying on unused treaty flexibility;

Three normative concerns:

1. Overcoming (or being honest about) illusions of synergy

2. Absence of labor

3. Security capitalism: foreclosing a public high-road to decision-making?
]]

]

---

## Thank you!

---
name: part1
class: inverse, center, middle

## Backup slides

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## Decoupling, derisking, or de-nothing?

Continued commercial and financial Sino-EU entanglements are a major source of controversy, especially when geopolitical choices force clear costs on EU firms, markets, and workers]

]
.pull-right[
<img src="data:image/png;base64,#derisking.png" width="90%" style="display: block; margin: auto;" />
]

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## The redistribution-efficiency dilemma

Balancing short-term aims (strategic autonomy) with long-term economic goals (balanced growth, level playing-field)

.pull-left[
<img src="data:image/png;base64,#Rplot.svg" width="90%" style="display: block; margin: auto;" />
]

.pull-right[
<img src="data:image/png;base64,#IPCEI-participants.svg" width="90%" style="display: block; margin: auto;" />
]

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## OSA appendix

Every edge is drawn when there is shared agreement/disagreement

Layout of the network calculated through the fast greedy modularity algorithm

Q = Σ [e(c) / m - (a(c) / (2m))^2]

Where:

Q is the modularity score.
e(c) is the fraction of edges that fall within community c.
a(c) is the fraction of the sum of the degrees of the nodes in community c.
m is the total number of edges in the network.
The sum Σ is taken over all communities in the network.
]]

.pull-right[
<img src="data:image/png;base64,#osa-appendix.png" width="70%" style="display: block; margin: auto;" />
]

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## Economic Uncertainty Index

.Small[
1. We draw on two newspapers per country for the European indexes: Le Monde and Le Figaro for France, Handelsblatt and Frankfurter Allgemeine Zeitung for Germany, Corriere Della Sera and La Stampa for Italy, El Mundo and El Pais for Spain, and The Times of London and Financial Times for the United Kingdom.

2. We count the number of newspaper articles containing the terms uncertain or uncertainty, economic or economy, and one or more policy-relevant terms.

3. We scale the raw counts by the total number of articles in the same newspaper and month.

4. We standardize each monthly newspaper-level series to unit standard deviation and then average across the 10 papers by month.

5. Finally, we normalize the 10-paper series to a mean of 100

Baker, S., Bloom, N. and Davis, S.J. (2016). Measuring Economic Policy Uncertainty. *The Quarterly Journal of Economics, Volume 131*(4), pp. 1593–1636. [https://doi.org/10.1093/qje/qjw024](https://doi.org/10.1093/qje/qjw024).]

---

## Geopolitical Threat Index

.pull-left[.Small[
1. Scraping all press releases, statements, and speeches from EU Commission website

2. Tokenizing texts

3. Using seedwords to detect relevant articles

4. Scaling division between geopolitical threats based on pre-difined dictionary

Trubowitz, P., & Watanabe, K. (2021). The Geopolitical Threat Index: A Text-Based Computational Approach to Identifying Foreign Threats. *International Studies Quarterly, 65*(3), pp. 852–865. [https://doi.org/10.1093/isq/sqab029](https://doi.org/10.1093/isq/sqab029).

]]

.pull-right[
<img src="data:image/png;base64,#textdist.svg" width="90%" style="display: block; margin: auto;" />
]

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## Image prompts, DALL-E 2

.pull-left[
“A tree that is both decaying and blossoming, painted by albert bierstadt”
<img src="data:image/png;base64,#growth-decay.png" width="75%" style="display: block; margin: auto;" />
]

.pull-right[
“A fork in the road as metaphor, painted by Turner”
<img src="data:image/png;base64,#fork.png" width="75%" style="display: block; margin: auto;" />
]